Amazon’s competitors are making life difficult for Whole Foods

Multiple retailers are using negotiating power afforded by their lease agreements to hamper Whole Foods' expansion and development under Amazon, Reuters reports.

For instance, Target is leveraging its sway with San Francisco's City Center mall to ensure that the grocer cannot sign a lease without agreeing to refrain from certain operations, sources told Reuters.

Retailers are turning to these tactics to prevent Amazon from further encroaching on their businesses with a full fledged brick-and-mortar network.

Retailers including Target, Bed Bath & Beyond, and Best Buy have varying abilities to limit Whole Foods' and Amazon's operations.

Some can bar Whole Foods locations from having Amazon Lockers. One of Amazon's first initiatives for Whole Foods was to introduce its lockers in order to build more pickup locations for Amazon customers. Many Target locations and potentially other retailers, however, have lease agreements that prohibit lockers of any type at the same complex.

Many leases may prohibit Whole Foods from having online fulfillment capabilities.It's been speculated that Amazon might use Whole Foods locations as fulfillment centers for online orders, specifically Prime Now due to the stores' proximity to affluent customers. This appears to be prohibited in leases held by Target and Lidl, making it difficult for Amazon to use its new brick-and-mortar network to its full potential.

There are some restrictions that prevent Amazon from selling its many product categories at Whole Foods. Retailers such as Best Buy and Bed Bath & Beyond have agreements with landlords that prevent other retailers from selling certain product categories, including electronics, housewares, and more, within designated areas. This would put the kibosh on Amazon's plans to sell Echo products in many locations, and would stop it from introducing its full product assortment.

This puts a damper on Amazon's plans to build out its brick-and-mortar network, but it can still find success with Whole Foods. Despite the various restrictions competitors can put in place, many landlords will likely want a Whole Foods location with all of Amazon's bells and whistles. Those locations may be harder to find than originally expected, but the e-commerce titan seems confident given its plans to open 85 new Whole Foods locations. These difficulties, however, suggest that Amazon may find more success in leveraging Whole Foods in online grocery, where it remains unrestricted.